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SHANGHAI — Lin Lu remembers the day last December when a Chinese businessman showed up at the car dealership he works for in north China and paid for a new BMW 5 Series Gran Turismo — in cash.

“He drove here with two friends in a beat-up Honda,” Lin recalled. “One of his friends carried about $60,000 in a big white bag, and the buyer had the rest in a heavy black backpack.”

Lugging nearly $130,000 in cash into a dealership might sound bizarre, but it’s not uncommon in China, where hotel bills, jewelry purchases and the lecture fees for visiting scholars are routinely settled with thick wads of renminbi, China’s currency.

This is a country, after all, where homebuyers make down payments with trunks filled with cash, and where big-city law firms have been known to hire armored cars to deliver the cash needed to pay monthly salaries.

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For all China’s modern trappings — the new superhighways, high-speed rail networks and soaring skyscrapers — analysts say this country still prefers to pay for things the old-fashioned way, with ledgers, bill-counting machines and cash.

Many experts say it is not a refusal to enter the 21st century as much as wariness — of the government toward its citizens and vice versa.

Doing business in China takes a lot of cash because Chinese authorities refuse to print any bill larger than the 100-renminbi note. That’s equivalent to $16. Since 1988, the 100-renminbi note, graced by Mao Zedong’s visage, has been the largest note in circulation, even though the economy has grown fiftyfold. (The country’s national icon, Chairman Mao appears on nearly every note: the 1, 5, 10, 20, 50 and 100.)

Chinese economists and government officials often suggest that printing larger denomination notes might fuel inflation.

There is another reason, though.

“I’m convinced the government doesn’t want a larger bill because of corruption,” said Nicholas Lardy, a leading authority on the Chinese economy at the Peterson Institute for International Economics in Washington, noting that larger bills would help facilitate corrupt payments to officials. “Instead of trunks filled with cash bribes you’d have people using envelopes, and there’d be more cash leaving the country.”

All the buying, bribing and hoarding force China to print a lot of paper money. China, which a millennium ago was the first government to print paper money, accounts for about 40 percent of all paper-currency output, according to a report published by China Banknote Printing and Minting. Adjusting for the size of its economy, China has about five times as much cash in circulation as the United States.

Although China’s coastal cities have flourished during 30 years of prosperity, economists say the country’s interior remains poor and disconnected from the more modern aspects of the financial grid. As a result, the poor prefer to do business in cash.

The rich also like to deal in cash, and they typically hide their money in the underground economy to avoid government scrutiny of their wealth. As was the case in other developing economies of Asia, easily traceable credit cards and checks are not commonly used.

“The average Chinese trusts neither the Chinese banks nor the Communist Party,” said Friedrich Schneider, an authority on shadow economies around the world and a professor of economics at the Johannes Kepler University of Linz in Austria. “This is simply a mistrust of government, and so lots of people deal only in cash.”

Perhaps those paper bills should come with a warning about storage practices. In March, a migrant worker in Shanghai discovered that mice had chewed the $1,200 his wife stored in a closet into tiny pieces.

A local bank agreed to exchange the money if the man could reassemble at least three-quarters of a bill. “But the bills are now in small pieces and it’s almost impossible to fix them,” said the worker, Zhao Zhiyong. “Who could know that the money would be chewed by mice?”

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